Minister of Finance, Okonjo-Iweala (left), Accountant General of the Federation, Jonas Otunla (middle)

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It appears a new kind of fraud in Nigeria. A contract was duly awarded by government to some private firms.

But when it was time to make payment for job done, the N3.538billion contract sum was diverted to an entirely different set of companies.

The companies which received payment did not bid for the jobs, were not awarded the contract and are not known to have offered any service.

The firms which offered service but have now been deprived their legitimate earnings are now crying foul.

They are accusing the National Insurance Commission, NAICOM, and the office of the Accountant General of the Federation, OAGF, of masterminding what appears an unprecedented fraud — diverting the insurance premium due to them (42 insurance companies) to other entities.

Already, a legal firm representing the affected insurance firms, Alade Agbabiaka & Co., has petitioned the Minister of Finance, Ngozi Okonjo-Iweala, and the Attorney-General/Minister of Justice, Mohammed Adoke, seeking their intervention in the matter.

Copies of the petition were also sent to the Director General, Bureau for Public Enterprises, BPP, Emeka Ezeh; Accountant General of the Federation, AGF, Jonas Otunla, and the National Commissioner of Insurance, National Insurance Commission, Fola Daniel.

The petition, obtained by PREMIUM TIMES, Alade Agbabiaka & Co., described the action of NAICOM and OAGF officials as “completely astonishing, unlawful and absolutely out of order.”

Counsel to the aggrieved insurance firms indicated that the BPP subjected over 40 insurance brokers who bided for the job to a screening and selection process in line with stipulated guidelines.

At the end of the screening, AIICO Insurance PLC and Standard Insurance Consultants Limited were appointed lead insurer and broker respectively to provide Group Life Assurance for employees of the Nigeria Police Force, NPF.

The deal was approved by the office of the Head of Civil Service of the Federation, HCSF, for the two firms to provide life cover for the police from January 1 to December 31, 2013.

In a letter, with referenced number HCSF/SW/SS/GLA/B/1019/1/ and dated September 6, 2013, the HCSF conveyed government’s approval for the two firms to serve as lead brokers, while a consortium of 40 other insurance firms were listed as underwriters.

Under the scheme, the Federal Government agreed to pay a total of N3.538billion as premium to the 42 companies listed as underwriters.

With the offer accepted and agreements and memorandum of understanding, MOU, signed by AIICO, the BPP issued a certificate of due process, following the approval of the deal by the Executive Council of the Federation, FEC.

After obtaining relevant approvals and certification, AIICO Insurance issued a policy cover and a debit note referenced: 252/2013/ABJ, to seal the contract.

However, while premiums for similar policies approved by the HCSF, in the Ministry of Police Affairs and Ministry Lands, Housing and Urban Development were paid when due, that of police formations and commands totaling N3.537billion were withheld by the OAGF.

On January 7, 2014, the insurance firm wrote to the AGF, reminding him of the pending premium to the affected insurance firms but the AGF never responded to the letter.

A source in AIICO, who pleaded anonymity, because he is not authorised to speak on the issue, told PREMIUM TIMES that further enquiries at the AGF’s office revealed the premium was diverted and paid to Crusader Insurance/Custodian & Allied Insurance PLC along with Hogg Robinson, as the lead insurer.

The transaction, the source said, was based on a memo purportedly sent by NAICOM to the office of the AGF.

But the petitioners have insisted that Crusader/Custodian & Allied Insurance PLC and its ally, Hogg Robinson, neither bided for the contract, nor went through the due process clearance by BPP.

The law firm also noted that the certificate of no objection and requisite approval by FEC, never included Crusader/Custodian & Allied Insurance PLC and its ally.

When contacted, the Director-General, BPP, Emeka Ezeh, said the involvement of his agency in the transaction ended with its issuance of Certificate of Due Process.

He, however, noted that any unlawful diversion of entitlements to any entity outside the parties duly awarded the contract, constituted a criminal breach that should attract legal sanctions.

Mr. Ezeh, who confirmed receipt of a copy of the petition by the aggrieved insurance firms, said the document was forwarded to all relevant authorities, including the HCSF, for necessary action.

“It is only when the Head of Service has responded that we (BPP) would know what to do”, Mr. Ezeh said.

Officials at the Ministry of Police Affairs and the HCSF refused to speak on the issue.

A similar enquiry at the Crusader/ Custodian & Allied Insurance PLC, said to have been paid the alleged diverted premium, was rebuffed.

An official of the insurance firm, who received calls from PREMIUM TIMES, noted that no staff of the company was authorised to respond to such enquiry, except the Public Relations Officer, PRO, who was said to be on vacation.

Also contacted, the National Commissioner of Insurance, Fola Daniel, denied knowledge of any letter from NAICOM directing the OAGF to divert the said premium to Crusader/Custodian & Allied Insurance.

Mr. Daniel, who spoke through the Assistant Director/Head, Corporate Affairs of NAICOM, Rasaq Salami, however confirmed receiving a copy of the petition on the issue, saying he has already invited all the parties involved to a meeting to amicably resolve the issues.

“No other agency is better placed to say why the alleged diversion was done than the Police themselves,” Mr. Salami said. “The Police always deal directly with the insurance companies, and they decide which company to use and how much premium to pay.

“NAICOM does not get involved at all, except where its advice is sought on the registered and viable companies for a particular transaction,” Mr. Daniel said.

The spokesperson at the OAGF, Charles Nwodo, said he would not respond to inquiries from PREMIUM TIMES, until he sees “concrete evidence of the memo authorizing the alleged diversion.”

Long after a Freedom of Information, FOI, request was submitted by PREMIUM TIMES to the OAGF, to formally react to the allegations raised in the petition, no reply was received as at the time of publishing this report.

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